The challenge
Which is a better fulfilment solution for eCommerce businesses selling on Amazon and other channels - Fulfilment by Amazon (FBA) or an FBA alternative?
Amazon Alternative Fullfilment
Y Frame Discounts Ltd is the one of the largest UK cycle accessories retailers on Amazon, specialising in cycling gear within the outdoor pursuits industry. Also selling on eBay, this multi-channel eCommerce business has big plans to become a leading flagship site within the cycling sector.
Which is a better fulfilment solution for eCommerce businesses selling on Amazon and other channels - Fulfilment by Amazon (FBA) or an FBA alternative?
For many online shoppers, Amazon is often the first place they go to for what they need. So it’s no surprise why so many eCommerce businesses want to sell there too – Y Frame Discounts Ltd being one of them.
Having dominated the eCommerce landscape, Amazon is a champion of super fast delivery. In fact, their next day delivery has raised customer expectations for online shopping in general. It seems every business should be playing by Amazon’s rules – or should they?
For eCommerce businesses like Y Frame who want to sell on Amazon but not deal with the fulfilment side of it, they’ll often use Fulfilment by Amazon (FBA).
Being able to sell your products on Amazon AND have them manage it all for you? Awesome! They can grant you Amazon Prime (if your KPIs are high enough), handle your customer service and run your returns management – all while your products are visible to millions of customers around the world.
But if you’ve ever tried to go down the FBA route, it’s actually a lot more complicated with a lot more hoops to jump through.
‘Amazon has helped to grow our business immeasurably, but their fulfilment guidelines are notoriously strict.’ –Y Frame Discounts Ltd
Having used FBA themselves, Y Frame discovered some not-so-great qualities about Amazon’s fulfilment, which also interfered with their eBay fulfilment. Thus posing the question: Which is a better fulfilment solution for selling multi-channel – FBA or an FBA alternative like a 3PL?
Let’s look at the challenges of FBA.
One common problem with Amazon’s fulfilment is inventory lag time. During busy periods such as Black Friday or Christmas, there can be delays that last anywhere between days and weeks for inventory to be logged into the system and ready to be shipped.
This can lead to delays in customers’ orders, which can result in negative reviews, a drop in seller ratings and even cancelled orders. But the big problem? Even if it doesn’t affect your customers, it still means you’ve got inventory sitting in Amazon’s warehouse doing nothing – resulting in missed sales opportunities.
Sellers can also be restricted by Amazon’s inventory storage limits.
To determine how much stock you can hold, Amazon uses its Inventory Performance Index (IPI) which gives businesses a score between 0-1000. The current IPI threshold for storage limits is 500, so scores above 500 indicates your business is doing well, whilst scores below 500 indicates there are issues and you need to improve your score.
Amazon hasn’t revealed exactly how these scores are calculated, but they may limit access to storage for sellers with an IPI below the threshold. Whereas sellers who maintain an IPI of 500 or more benefit from unlimited storage for standard and oversized items.
The problem with this is the unpredictability of it. If your sales dip a little, you’re immediately penalised by Amazon and no longer have the same storage space available. Depending on how much stock you have, you may be forced to temporarily rent out extra storage space to compensate for the stock Amazon’s restricted.
Your stock also has to arrive at Amazon’s warehouses in a certain way or it may be refused.
Products have to be prepped and meet Amazon’s criteria before they can be stored – involving FNSKU labels, SKU numbers, EAN/UPC/ISBN barcodes etc.
Amazon can prep your items for you, but it comes with a hefty price tag (especially when you add it to Amazon’s fulfilment fees, including monthly storage costs, membership fees, shipping fees etc.). That’s why a lot of businesses outsource the labelling to Amazon prep centres. But they’re still not cheap.
When you end up racking up the cost of sending your stock to the prep centre, the cost of having it prepped (around 10p-20p per item) and the cost of it being sent to Amazon, it’s a lot of money and another middleman you have to rely on.
This raises another issue – no branding.
There’s no customisation with FBA and your products are resigned to Amazon’s classic brown packaging, which isn’t great for brand recognition. There’s no ability for businesses to personalise their packaging (eg. inserting a handwritten note), so if establishing a strong brand is important, businesses will have to look beyond Amazon FBA.
Ultimately, Amazon may be a great sales channel, but it’s a poor fulfillment solution – especially for multi-channel businesses.
The real crux of the problem for Y Frame was having to juggle FBA for their Amazon store and a 3PL for their eBay store. Dealing with the hassle of two fulfilment centres split their business, rather than streamlined it.
They were having to pay for two separate services that lacked the ability to communicate between each other and work in unison.
‘Using two different fulfilment centres left us feeling like we were running two businesses.’ – Y Frame Discounts Ltd
Having their stock in two different warehouses made it harder to gain full control and visibility over their inventory. Whilst forecasting how much stock they’d need to send to Amazon (and factoring in prep time) meant they were effectively relying on two middlemen to process their inventory on time – which wasn’t always the case.
FBA isn’t built for multi-channel, which is why some businesses only sell on Amazon. But for those who sell on other channels, an FBA alternative like a 3PL is a much simpler and more flexible solution.
That’s why Y Frame decided to streamline their business with Parcel Master.
Outsource their fulfilment to a 3PL that has the flexibility to manage orders across multiple channels - keeping it all in one place.
For multi-channel businesses like Y Frame, simplicity is key. And our services are just that. Y Frame decided to make the move from FBA (for Amazon) to FBM by using our 3PL – carrying everything over to one single warehouse.
Here’s why.
Our software can easily integrate with marketplaces like Amazon and eBay, meaning the two can be managed from one place with greater control and visibility over stock.
There’s no inventory delays with us. We’re able to quickly replenish Y Frame’s stock and bridge the gap between having down periods (where stock was waiting to be added to the system) and the cost of missed sales opportunities.
We don’t apply the same inventory storage limits as Amazon. As long as your stock can fit in our warehouse, there’s no limit.
‘Parcel Master has simplified the entire fulfilment process for us. Integrating our Amazon and eBay stores was so easy and works perfectly. Nothing is too much trouble and they’ve totally transformed our delivery service.’ – Y Frame Discounts Ltd
And even though they’ve left FBA, they haven’t lost out on Prime delivery. We’re able to run Amazon Prime shipping as a service because our on time delivery rates are so high. That means their customers still benefit from fast and efficient delivery, and Y Frame no longer has to jump through hoops to offer it.
Whilst overall Parcel Master may be more expensive than FBA, we remove the delays and hassle that come with Amazon fulfilment and focus on offering a more streamlined, less complicated process for businesses to get their goods out the door (and sometimes back in with our returns management).
One other difference is we don’t offer customer service like FBA. But Y Frame had to outsource their customer service for eBay anyway – meaning they had two separate customer service solutions for their Amazon and eBay stores. Whereas now they can outsource their customer service for both stores to just one centre.
Y Frame could now ditch the Amazon prep! Instead they can ship their products straight to us without the need to meet a strict criteria of Amazon-friendly labels. By removing the middleman altogether, it makes us more agile than FBA or any prep centre.
We’re also a lot more flexible when it comes to packaging. Now, Y Frame has the freedom to customise their packaging and show off their branding however they like – helping to improve brand recognition.
Able to control fulfilment across all channels with ease and speed from one place - eliminating the risk of inventory delays and missed sales opportunities.
Y Frame now has the flexibility to store all their products in just one warehouse and streamline their back office with our multi-channel-friendly software.
By working with Parcel Master, they also benefit from a more agile (and cost-effective) team that’s able to scale up during busier periods and shrink down during quieter periods – ensuring there’s no lag time between adding stock to the system and delivering orders to their customers.
Missed opportunities are a thing of the past and they’re now able to work with a fulfilment solution that can scale with them, not hold them back.
Since partnering with us, customers have been highly rating our delivery service:
‘Awesome service, packaged so that it fit through the letterbox!! Thank you. As expected and delivered on time, thanks.’ – Sandra
‘Fantastic product and great service thank you. Arrived next day without Prime!’ – Gillian Hewison
‘Swift, efficient order process, appropriately packaged, arrived earlier than stated on the order and easy to fit. Very happy.’ – Jonathan Bagley
‘Prompt dispatch and delivery. Does the job well.’ – Jed Carpenter
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